Posted on 04/21/2014 6:12:32 AM PDT by LucianOfSamasota
This month marks the fifth anniversary of the Chrysler bankruptcy. President Obama will doubtless mark the occasion by talking about how his intervention saved the auto company. More noteworthy, however, is how the lawlessness of that intervention created tremendous uncertainty, which still chills the economy today.
Todd Zywicki has written an excellent summary of President Obama’s actions in the Chrysler bailout. A shorter version goes like this.
Starting under President Bush and continuing under President Obama, the federal government used TARP funds to keep Chrysler afloat. This gave the government effective control over Chrysler. As a result, the Obama administration was able to call the shots when it put Chrysler through bankruptcy.
Under long-established bankruptcy rules, holders of “secured debt” are rightfully owed 100 percent of what they loaned the company. However, the Administration decided it would not play by those rules. Instead, it decreed, holders of secured debt would receive only 29 cents on the dollar. Meanwhile, it decreed that the United Auto Workers, which had no secured creditor rights, would get 40 cents on the dollar.
(Excerpt) Read more at blog.heritage.org ...
When the "king" decides who gets the reward, productive effort is pointless. The only path to success or security becomes sucking up to the king.
Patronage system rather than free market.
Obama: Bringing the third world to America!
A Plymouth Voyager van was the biggest dud I ever owned.
We called it the ‘AntiChrysler.’
On the other hand, I had a nice Dodge truck with 318 engine.
There .. fixed it!
Meanwhile, an Italian Company took ownership of the company.
This administration rewriting of history is the ultimate indicator we are in a third world country.
The entire talking point the Dems proclaimed they saved GM from bankruptcy was a lie. But what really showed me that we are finished was that many voters bought that story hook, line and sinker.
A lake friend had a significant amount of his retirement in GM bonds. They’re worth zero today...
Government has no place determining the winners and losers in the marketplace.
The original Chrysler bailout in the 70s set a horrible precedent.
Every freeper should read and reread this article.
Obama's lawlessness started the day he told the secured Chrsyler and GM bondholders that they were out of luck. I still don't know how he got away with this one.
We don’t hear much about The 500 dealerships (1233 total franchises) closed due to bankruptcy.
It appears The Watcher was wrong.
Any bankruptcy of a company this large would have long-lasting impacts on the economy.
And in a bankruptcy someone always gets SCROOOOOOD. It’s just that in this case the SCROOOOOing has been blatantly redistributed.
This whole admin has been about the destruction of Contract Law, the Rule of Law, taking us further back than English Common Law, and maybe even marking their territory on the Magna Carta.
What's worse? the precedent's set in the GM / Chrysler fiasco it showing up again by making Pensioner's "Whole" or getting a better deal that a cut and dry bankruptcy with what is going on in Detroit.
The State may throw in 350 million so they don't get such a bad deal ( do your homework on what they are getting ). Where in the real world, a small business that goes belly up, the pension is frozen in time and that is it.
What ticks me off is the tax payers of Michigan pick up the slack for years of poor management and malfeasance by the various Detroit City Administrations and their Chosen Pension Managers.
Why do we have to be on the hook for their stupidity....
The big issue here is contract law and how Obama and his gang just turned it on it’s ear.
I read a long time ago that the AG of Indiana filed a class action suit on behalf of the bondholders. Anyone know of the progress of that suit?
we sold it pretty cheaply unfortunately to a neighbor/fellow church going...the dang thing stopped a week and half later...bad transmission....can not even look those people in the eyes to this day,I'm so embarressed by it...
the Dodge dart...okay gas mileage, okay power...nothing to brag about..
you see you have to throw in with the right group of crooks....
I don't buy that. Besides if a company is that large, it needs to be broken up.
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